question_answer

VK Ltd issued 5,000, 9% debentures of Rs. 100 each at par for cash and also raised a loan of Rs. 80,000 from America Bank, for which the company placed with the bank Rs. 1,00,000, 9% debentures as collateral security. As per the terms, the bank is obliged and bound to immediately release the debentures, as soon as the loan is repaid. How will you show the debentures in the balance sheet of the company assuming that the company has recorded the issue of debentures as collateral in the books?

Answer:

                                                            Balance Sheet                                                                         as at ?..

	Particulars	Note No.	Amt (Rs.)
I.	EQUITY AND LIABILITIES
	1. Non-current Liabilities	1	5,80,000
	Long-term Borrowings		5,80,000

Notes to Accounts

Particulars		Amt (Rs.)
1. Long-term Borrowings
Loan from Bank		80,000
Debentures
5,000, 9% Debentures of Rs. 100 each		5,00,000
1,000, 9% Debentures of Rs. 100 each Issued as Collateral Security	1,00,000
(-) Debenture Suspense	(1,00,000)	-
		5,80,000